Our observation that glucagon sensitivity is lost and prostaglandin (PG) production reduced in MDCK cells upon viral transformation, but could be restored by culturing cells in the presence of PG, led to our hypothesis that PG serve as locally produced developmental hormones. Reduced production results from decreased activities of phospholipase and synthetase in transformed cells. Additionally, glucagon responsiveness is reduced in normal MDCK cells when PG production is inhibited. We are currently trying to determine if the developoment of glucagon receptors in MDCK cells is directly related to PG production. Reduced PG production was also observed in NRK cells transformed with Kirstem sarcoma virus, but not in CHL cells transformed with SV40 virus. Whether decreased PG production is a unique characteristic of transformation by RNA tumor viruses is currently under investigation. Our collaborations with V. manganiello revealed that alterations is transformed MDCK cell phosphodieterase activities could be restored by differentiation inducers suggesting that these cells serve as a useful model for studying the development of various cellular functions.